Korbel Foundation College, Inc.

Purok Spring, Brgy. Morales, City of Koronadal

Tel Number 877-2051/0228-1996

CHAPTER 1. ETHICS
AND BUSINESS
GOOD GOVERNANCE AND SOCIAL
RESPONSIBILITIES
GGSR
 Learning Objectives
At the end of this lesson
you will be able to:
• Identify what is ethics and
business
• Explain the importance of ethics
in business
• Know the businessman’s myths about
business Ethics
•Explain the relationship between ethics and business
•Understand the Moral Reasoning in Business
• Know the characteristics of a Good Moral
Standards and Characteristics of a Good Moral
Judgment
 INTRODUCTION

Business is a part of human society. And since it is part of the

complex web of interaction among institutions and people, its
activities must be viewed and examined from the perspective of
morality.

Business without Ethics threatens the survival of human society.

The study of business ethics paves the way of our common
understanding of the fundamental concepts of what is right and
wrong in the conduct of business
 Content

THE NATURE OF BUSINESS ETHICS

 Content
• Ethics

- the principles of conduct governing an individual or a group.

- Ethics as a science does not only evaluate the morality of our human conduct but also
provides us with common understanding of the universal, objective, and irreversible moral
principles that govern our human conduct and guide our moral decisions.

 Personal Ethics

 Accounting Ethics
•Morality
- the standards that an individual or a group has about what is right and wrong, or good and evil.
• Business
- is an activity that is part and parcel of human society.
- is an integral part of society, its activities must be examined from the ethical perspective, in the
way that society examines politics, economics, government, culture, and religion for the moral point
of view.
- also a complex activity that involves major activity like production, manufacturing, marketing,
advertising and selling.

• Without ethics, business will be a chaotic human activity because there will be
no common understanding and agreement about what is wrong and right human conduct.
•Moral Standards
- Include the norms we have about the kinds of actions we believe are morally right and wrong as
well as the values we place on what we believe is morally good or morally bad.

•Business Ethics
- a specialized study of moral right and wrong that focuses on business institutions, organization, and
activities.
- a study of moral standards and how those these apply to the social systems and organization through which
modern societies and distribute goods and services, and to the activities of the people who work within these
organization.
•Systematic
- issues in business ethics are ethical questions raised about the economic, political, legal and other
institutions within which business operate.

• Corporate
- issues in business ethics are ethical questions raised about a particular organization.
 •Individual
- issues in business ethics are ethical questions raised about a particular individual or particular
individual within a company and their behaviors and decisions.

•The Importance of Ethics in Business

The study of Business Ethics paves the way for common ground in our understanding fundamental idea of
what is good and what is bad in our human conduct. Without Ethics people, especially businessman, will set their
own moral standards moral rules, and moral principles. With this paradigm, business people will consider some of
their actions good but unacceptable to others.
Another important aspect in business that needs profound examination is the manner in which business leaders
and managers confront ethical issues and problems affecting the flow of business activities.
 Content

THE BUSINESSMAN’S MYTHS ABOUT BUSINESS

ETHICS
 Content
THE BUSINESSMAN’S MYTHS ABOUT BUSINESS ETHICS
Businessmen are not immoral. And it would be disastrous to say that business people commit
unethical acts in doing business. However it is the business leaders’ wrong perception of the role of
ethics in business that affect their decisions, and in some case forget to be ethical. Here are some
myths of businessmen about business ethics: (De George, 1982)

• Ethics is a Personal Affair and not in Public Debatable Matter

- Some businessmen claim that Ethics is a private issue and not a public matter. In one sense,
this is true because one’s concept of morality is a result of environmental factors, like religion,
culture and family values that have a great impact on the person. If ethics is a subjective thing,
then it will make morality very personal and relative therefore, what is good for one person may
be bad for another, what is bad for one person be good for another person. Thus, Ethics is not
a personal affair but a public debatable matter.
• Ethics and Business do not Mix.
- since business is part of human society and its activities operate within the structure of beliefs
and values system of people, it must also be viewed and examined from the perspective of ethics.
Further the belief the Ethics does not mix with business will no justify illegal activities and will most
likely promote questionable practices in business activities. Certainly, Ethics has a place in business.

• Ethics in Business is Relative

- Akin to the view that ethics is a private and subjective matter is the claim that morality depends
on cultural and religious orientations of people. This is another wrong perception on the role of
Ethics in business. This implies further that what may be considered a right action in one country
may be unacceptable in another country.
EXAMPLE: Abortion may be legal in Japan but certainly not in the Philippines. If morality is relative
then what is good in one place may be bad in other places, and vice- versa.
• Good Business Means Good Ethics
- Some businessmen claim that good business means good ethics. This is
certainly a myth. A business may be profitable but the means of acquiring profits
may be questionable. Profit maximization is a good end in business but the means
of getting those profits must also be examined. The end does not justify the means.

• Business is a War
- Some business leaders and businessmen believe that business is a war. For
them the market is an arena of gladiators trying to fight for survival and vying for the
number one position. Business is a good human activity. And as an integral part of
the society it must promote healthy competition and not destroy the competitors.
 THE RELATIONSHIP BETWEEN ETHICS AND BUSINESS
Ethics plays an important role in business. With out morality, business will be a chaotic human activity.
Ethics is not a study of positive laws intended to govern and regulate the action of people doing business. The
following arguments justify the significant role that Ethics plays in the world of business:

• Business is an integral part of human society.

• In business, as any other human endeavor, “ what is legal may not necessarily be moral.
• Laws are insufficient. They cannot regulate all aspects of our human behavior.
• In today’s technocrat- oriented business education, the trend is to train managers to maximise profits and quantity
the operations of business.
• Peter Drucker argues that “the enterprise is an organ of society and its action have a decisive impact on the social
scene”.
 MORAL REASONING
Content IN BUSINESS

The essence of studying Business Ethics is to provide managers and

decision makers with a framework for the resolution of moral issues and
problems affecting business activities and the organization. Moral reasoning
is a process in which ethical issues and problems are benchmarked against a
moral standard so that a moral judgment is made possible. Since manager
are tasked to solve problems in the organization and its activities, it is also
the responsibility of managers help in the resolution, if it not prevention of
moral problems in business activities and the enterprise.
 Ethical Moral Norm
Issues/ REALITY Moral Standard Moral
Problems CHECK Company Policy Judgement
Ethical Principle

SITUATION PROBLEM DECISION

RESOLUTION
ANALYSIS ANALYSIS ANALYSIS
 -Gravity of offense
Example: -Company rules/
- frequency of offense
Graft - harm done policies -Moral or Immoral
Sexual Harassment - ethical principles
- number of people - Legal or Illegal
Theft - codes of conduct
affected - moral norms
Bribery -Cost

Figure 1. Framework of Moral Reasoning

•Characteristics of Good Moral Standard
1. A good moral standard is one that looks at the issue as something that is very
serious.
2. A good standard must be grounded on good moral argument.
3. A good standard should be objective and not subjective.
4. A good standard, when violated, brings about feelings of guilt, shame, and
remove of conscience.

•Characteristics of a Good Moral Judgement

1. A good moral judgement must be logical.
2. A good moral judgement must be based on facts and solid evidence.
3. A good moral judgement must be based on sound and defensible moral
principles.
 SUMMARY
•Ethics- the principles of conduct governing an individual or a group.
•Morality- the standards what is right and wrong, or good and evil.

•Business- is an activity that is part and parcel of human society.

•Business Ethics
- a specialized study of moral right and wrong that focuses on business institutions,
organization, and activities.

•Business is an integral part of human society.

•Moral reasoning is a process in which ethical issues and problems are benchmarked against
a moral standard so that a moral judgment is made possible
 ASSIGNMENT

1.What is your own personal definition of Business Ethics?

2.Explain the phrase: “Not all that is legal is moral, but what is
moral is worth legalizing.”
3.Explain the phrase: “Ethics is the unwritten law written in
the hearts of men.”
4.Do you agree with Milton Friedman that the only
responsibility of business is to maximize profits? Why or
why not? Discuss your answer.